Franchise entails the opportunity offered by franchisor to the franchisee (the new business) the freedom to own, manage and direct their own business subject to certain restrictions. Franchisor lends their trademarks, logo, or such licenses for a period of term. The other franchising system is the business format franchises, a complete system of doing business. The introductory note is that franchising is complex and there are generally two main levels: one is under the federal law, and the other is under the state level regulations of the location.
I have recently filed Franchise Disclosure Document and Franchise Agreement for a client who has successfully established about thirty restaurant type outlets in over ten states. Some issues involve state-specific inquiries as to franchise law and its state law interplay.
The franchisee I represented took a loss and had to wind up his business and as such his case represents the ways a franchisee can be stuck and not be able to get out of the deal, a good lesson to learn before getting involved.
One franchisee, intending to buy Dunkin Donuts, transacted the business successfully with the inclusion of another partner.
One another case involved, franchisee threatening to sue the franchisor which was settled out of court.
One franchisee, a gas station owner, barely used the services of the attorney as the franchisor was too big and complicated for this immigrant franchisee to go through the transactions and decided to just do it alone with a mere consultation.